United States District Court, D. Colorado
ORDER ON PLAINTIFF'S MOTION RE ENTRY OF FINAL
Brooke Jackson, United States District Judge
5, 2007, at the conclusion of a two week trial, the jury
rendered its verdicts (1) in case no. 15-cv-1252-RBJ, in
favor of the plaintiff, Wellons, Inc., on plaintiff's
breach of contract claims against defendants Eagle Valley
Clean Energy, LLC and Evergreen Clean Energy Corporation, and
awarding the same $10, 840, 000 in damages against both
defendants; (2) in case no 15-cv-1252-RBJ, in favor of Eagle
Valley Clean Energy, LLC, Evergreen Clean Energy Corporation
and related individuals and entities on plaintiff's
fraudulent transfer claim; and (3) in consolidated case no.
15-cv-02055-RBJ, in favor of defendant Wellons, Inc. and
against plaintiff GCube Insurance Services, Inc. See
ECF Nos. 367 and 368 (unredacted), 369 and 370 (redacted).
7, 2017, at the Court's request, the Courtroom Deputy
circulated a draft form of judgment prepared by the Court for
comments by counsel. Both Wellons and the Eagle Valley
defendants disagreed with certain aspects of the draft as it
related to case no. 15-cv-1252-RBJ. GCube indicated that it
no objection to the form of judgment as it related to case
Court here addresses the post-trial issues raised by the
parties to case no. 15-cv-1252-RBJ. The issues have been
briefed. See ECF Nos. 355, 377, 378, 379. Neither
party has requested oral argument. The Court finds that it is
sufficiently informed about the disputed issues to resolve
them on the briefs.
first dispute concerns whether interest should be awarded on
Wellons' verdicts against Eagle Valley Clean Energy, LLC
and Evergreen Clean Energy Corporation. I will at times refer
to Eagle Valley Clean Energy, LLC as “Eagle
Valley;” to Evergreen Clean Energy Corporation as
“Evergreen;” and to the two entities collectively
as the “Eagle Valley defendants.”
The principal amount claimed under the contracts.
December 2011 Wellons contracted to construct a wood-fired
electricity cogeneration facility for Eagle Valley.
See Amended and Restated Engineer, Procure, and
Construction Contract (the “EPC Contract”), Trial
Exhibit (hereafter “Ex.”) 17. Because Wellons
later assisted Eagle Valley with construction financing until
other financing, including a substantial government grant,
was obtained, Wellons obtained a Subordinated Promissory Note
dated August 8, 2013 from the related party, Evergreen. Ex.
achieved what it believed to be “Final
Completion” of the construction project on March 20,
2014. However, Evergreen had not yet received the government
funds, which were critical to its ultimate financing
obligation. On or about May 1, 2014 Evergreen received the
government funds. Despite that, neither Eagle Valley nor
Evergreen paid the amounts owed under the EPC Contract and
the Subordinated Promissory Note, claiming that the
construction was defective and incomplete. Efforts to resolve
the dispute over the ensuing several months were
unsuccessful. On October 2, 2014 Wellons submitted a formal
written demand for payment within seven days of the funds it
claimed to be owed under the contracts. Ex. 55. No payment
was made, and this lawsuit followed.
trial the parties stipulated that the maximum principal
amount Wellons could recover under either or both of the EPC
Contract and the Subordinated Promissory Note was $10, 841,
166.80. ECF No. 365 at 10 (Instruction No. 8, ¶¶2,
4). In the verdict form, with the approval of both parties,
the maximum amount claimed by Wellons under both contracts,
exclusive of interest, was rounded off to $10, 840, 000.
See Verdict I, ECF No. 367 (unredacted), No. 369
(redacted), at 2, 3. That amount was awarded by the jury to
Wellons against Eagle Valley on the EPC Contract and against
Evergreen on the Subordinated Promissory note. Id.
Interest claimed under the contracts.
Contract provides that late payments by Eagle Valley
“shall incur a simple interest charge at the legal rate
of five percent (5%) per annum.” Ex. 17 at 50,
¶XI(B)(2). The Subordinated Promissory Note provides
that Evergreen would repay Wellons' advances plus
interest “promptly following the initial funding under
the RUS Financing but in no event later than two (2) years
from the date hereof.” Ex. 3 at 2. The RUS Financing
refers to government funds. The interest rate provided in the
Subordinated Promissory Note was 15.0% percent per annum on
Wellons' Initial Advance in the amount of $5, 352.675;
15.0% on Wellons' Intermediate Advances in the amount of
$3, 000, 000; and 0% on Wellons' Final Advances in the
amount of $3, 389, 600. Id. at Schedule 1.1.
the trial Wellons' Chief Financial Officer, Robert Harold
Moore, calculated what he believed to be interest due on the
contract claims. An unedited realtime transcript of his
testimony was filed by the Eagle Valley defendants at ECF No.
378-2. His calculations are documented in Ex. 107A, submitted
as ECF No. 378-3.
Moore began by breaking the $10, 841, 166.80 principal amount
into two parts: (1) $7, 920, 264.24, which he characterized
as “Initial and Intermediate Advances at 15%”
(referring obviously to the interest rate provided in the
Subordinated Promissory Note for the first two levels of
Wellons' advances), and (2) $2, 920, 902.56, which he
characterized as “Final Advances (Retention).”
ECF No. 378-3. He used October 1, 2014 as his “Start
Date” and April 30, 2017 as a “Current End
Date.” He applied the 15% rate to the $7, 920, 264
component. However, he applied an 8% rate to the $2, 920,
asked to explain the 8% rate he testified that it is the
“statutory amount that's allowed in
Colorado.” ECF No. 378-2 at 112. He did not use the 0%
rate provided in the Subordinated Promissory Note for the
third level of Wellons' advances. He likewise did not
mention the 5% late payment rate provided in the EPC
Contract, apparently believing that it was subsumed within
the larger rate provided by the Subordinated Promissory Note.
Moore then added a category he labeled “Past
Due/Pre-Construction Financing interest - as of 8/16/13,
” using the 8% rate for that category. ECF No. 378-3.
He testified that August 16, 2013 was the date when Eagle
Valley obtained construction financing from Deutsche Bank,
and that this category amounted to “interest on past
due interest.” ECF No. 378-2 at 111-12. Finally, he
added a category labeled “Preferred Debt Interest on
Initial & Interim Advances as of 09/30/14, ” at
15%. ECF No. 378-3. He explained that that was “the
bridge loan or the preferred debt based on the advances made
to Evergreen on the capital contribution agreement.”
Id. Moore's grand total of principal and
interest of April 30, 2017 was $17, 629, 535.35. Id.
hard to understand, even in retrospect, why Mr. Moore
believed that he could use an 8% rate that was not provided
in either contract and that was contrary to the 0% rate
provided for the third tier of advances in the Subordinated
Promissory Note. Presumably he (or whoever was advising him)
was referring to the 8% interest rate provided at Colorado
Revised Statutes § 5-12-102(2). But, that rate applies
only where there is no agreement in the contract to a rate,
see C.R.S. § 5-12-102(1). Moreover, both
contracts provide that they will be governed by Utah law. Ex.
17 at 73; Ex. 3 at 2. Even apart from the erroneous inclusion
of the Colorado 8% rate in his figures Mr. Moore's
analysis was, at best, difficult to understand and to relate
back to either of the parties' contracts.
in his closing argument Wellons' counsel asked the jury
to award the stipulated maximum principal amount of $10, 840,
000 plus interest as calculated by Mr. Moore. This was
consistent with his opening statement in which he had
informed the jury that Wellons claimed “over $17
million which includes accrued interest.” ECF No. 378-1
at 2-3, 4. Specifically, the verdict form, as is pertinent to
the present discussion, asked the jury to answer the
3. What was the amount of damages incurred by Wellons as the
result of Eagle Valley's breach of contract (the maximum
amount, not including interest, is $10, ...